A senior official at Russia’s central bank has contended that blockchain technology needs to improve in security and scale and is currently not ‘mature’ enough.
Bank of Russia deputy governor Olga Skorobogatova was speaking at the annual St. Petersburg International Economic Forum during the weekend when she made several pointed remarks on blockchain technology. According to a local report, the central bank official claimed the decentralized technology is yet to ‘mature’ and hasn’t been used on an industrial scale, except with cryptocurrencies.
In translated remarks, she stated:
“In the world there is still no big industrial solution on distributed ledgers, except for bitcoins…This is mainly due to the fact that the technology is not mature enough…it still requires a lot of improvements both from a security view point and in terms of scalability.”
Skorobogatova split blockchain applications into two broad camps. Blockchain platforms that provide online functionality like electronic letters of credit would benefit from the likes of R3’s Corda and Ripple, she said. The second category involves offline platforms that offer the functionality of smart contracts with the official citing Ethereum and the open-source Hyperledger software as examples.
The lack of implementation of the technology on a larger industrial scale, the official claimed, was due to the fact that businesses and executives are yet to understand the value of transitioning and adopting blockchain tech.
Still, “technology for the sake of technology is pointless” Skorobogatova argued before predicting that the world will come to a “practical understanding” of the innovative technology in 2018. Companies will then be able to determine the applicability of blockchain tech at industrial scale, she continued.
While the statements are noteworthy from an official who leads the central bank’s own ‘blockchain working group’, Skorobogatova has previously been critical of the idea of instant disruption brought on by the technology. “The myth of blockchain that everything is ready and you can move, reduce costs and give up the [need for a] bank, it turned out to be a myth,” the official said in late 2016.
However, Skorobogatova was the first Russian central bank official to publicly nod toward the possibility of a blockchain-based national cryptocurrency. It could take a public-private hybrid blockchain to develop a national digital currency, she said in April 2016. Last year, Russian president Vladimir Putin ordered authorities to begin work on developing the ‘Cryptoruble’, effectively Russia’s national cryptocurrency which will serve as legal tender.
Despite the recent remarks, the Bank of Russia has developed and launched regulatory platform aimed at fostering and developing financial technologies including blockchain. Last week, it was announced that the central bank platform will be used to carry out an ICO trial, the sale of blockchain-based crypto tokens, this summer.
The Bank of Russia has also tested a financial messaging system as an alternative to SWIFT among domestic banks with an ethereum blockchain prototype called ‘Masterchain’. Just this week, central bank chief Elvira Nabiullina revealed that the authority had developed its own SWIFT alternative as a solution for if/when sanctions are imposed on Russia.
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